The city of Plainview sold its maintenance facility in an all-cash transaction and used the proceeds to improve the city's financial position.The city then leased the building from the new owner on a non-cancellable basis.The city will be responsible for the maintenance and upkeep of the facility.These transactions illustrate:

Question

Quizplus · Accepted Answer

The transactions described in the scenario are indicative of a sale and leaseback arrangement. The city of Plainview sold its maintenance facility and leased it back from the new owner on a non-cancellable basis. This allowed the city to generate cash through the sale while retaining the use of the facility through the lease. The responsibility for maintenance and upkeep now lies with the new owner, while the city has improved its financial position. Therefore, the correct answer is C - a sale and leaseback.

The City of Plainview Sold Its Maintenance Facility in an All-Cash